Senior Relationship Manager
Summary: Looking for the big picture
Good Morning,
Markets remain fascinating with FX particularly so
The USD Index trades as high as 107.25 before giving up ground to 106.83. EURUSD is at 1.0203, GBPUSD 1.1950 and USJPY at 13570. Gold and Silver sold off yesterday but could recover to 1746 and 19.36 for now. USDTRY is approaching recent highs and is trading at 17.24.
10 Year rates rise to 2.96 and the 2/10 rates remain inverted hinting at a recession - it basically shows the expectation that further down the timeline, rates will fall again.
With commodity under pressure and energy the main cause of rising costs of living, inflationary pressures may recede a little. This should not necessarily be the case in Europe where fears of a gas shortage remain and German Minister Habeck warns of a recession in Germany. The Bund Future has risen significantly the last few days, hinting the ECB may turn out more dovish than previously expected.
Equities are in a bit of tense stasis. With all three US Indexes closing less than 0.5% away from the previous day. German stocks are a bit the outlier, gaining 1.6% yesterday and the future gains an additional 1%.
The FOMC Minutes confirmed the Fed has a tough stance on inflation but hint that FOMC members were concerned with "larger-than-anticipated" impact by the rate hikes on economic growth.
The UK remains in turmoil as Boris Johnson refuses to resign and his staff is resigning left right and center.
Our Strats Team is extremely active in all markets, please find some key articles below:
Crude oil breaking rising trend line finding support at key levels. Will they hold?
DAX/GER40 taking out March lows. Will it continue lower?
Gold broken key support. Silver dropping like a stone. How low can they go?
Junk rally on recession fears, Amazon partnering with Grubhub
Can Bitcoin continue to pay for its security?
There are few tier 1 news today, the Swiss Forex reserves are interesting for anyone who trades CHF, that aside the usual Thursday US labor data and the Canadian PMI, all at 14:30.
Next key event is the US Non-Farm Payroll tomorrow, giving a hint on the next rate decision.
Watch commodity prices and any indications on Russian Gas deliveries to Europe.
As International Bond Markets seem to become a subject again, kindly be aware that there is decent number of mutual funds on the platform that give you access to professionally managed exposure to fixed income markets – in the last couple of years. Many of our clients stopped trading bonds simply due to le lack of attractiveness of the asset class. That seems to be changing.
If you would like some assistance, please contact us
Trade safely
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.